Investment plans enable curb inflation and gradually develop a good corpus. It is wise to compare different investment plans and opt for the one which best solves your purpose. One should select the investment tips to plan considering 3 main objectives:
- Investment Period – Investment plans normally offers mid-to-long term investment options. You should opt for the one which suits your plan of investment.
- Risk Factor – If you are ready to take financial risks, then you can opt for ULIP. However, if you are a conservative investor, then a money-back plan or a traditional endowment policy is the best for you.
- Final Objective – The purpose of your investment plays a major role in your investment plan. Whether the corpus is for child’s education or retirement, one should consider all this before investing.
Since this financial year is coming to an end, let us evaluate a few investment options which will prove to be beneficial for the following year. I personally wish to invest in insurance this year so let’s consider this option first –
Insurance is the considered as one of the best options for investment. It is an investment which is safe and stable till the premiums are paid on time. However, it is extremely crucial to familiarise yourself with different kinds of investment plans before opting for one.
ULIPs, I personally believe are the simplest ways to put your foot forward towards the stock market with an additional benefit of life cover. Apart from this, ULIPs also offer market linked returns and tax benefits. In fact, ULIP’s are considered as major long-term investment plans. Apart from this, they offer multiple investment options which can be shifted between debt and equity. All this certainly is dependent on risk profile and market conditions.
Endowment plans are a normal investment and saving plans that enable build a corpus and offers definite bonus along with maturity benefits. Endowment plans offer equivalent returns to fixed deposit and also provides insurance risk which helps develop a safety cushion in case of an emergency.
Money back Plans are best for the people who wish to have periodic cash. Since they help build capsules of the fund; they are a wise investment option for salaried people who save a small amount for investing in large assets every 3-5years.
Child Plans are best for parents who wish to build assets for their children’s future. They also offer a number of insurance features which helps in corpus building; primarily for the future education and expenses of the child.
Other Options to choose from:
Mutual Funds: This is a systematically managed trust wherein all the investment is pooled from retail investors. This amount is later invested in a number of financial instruments like securities, shares, etc. Once income is realised from these instruments, it is shared amongst investors proportionally. Mutual Fund is by far one of the best options because of its low charge structure.
Investments in Gold: The value of gold is fluctuating and its raise and fall are unpredictable. However, because of our Indian custom, there are a number of people who still believe strongly in investing in gold. For people who wish to invest in the same, there are different methods like ETF, physical gold, and e-gold.
Postal Schemes, PPF, and Bank Fixed Deposits: These 3 options are considered as best for people who look for safe investments.
However, it is to be noted that unlike insurance; other investment options do not provide a financial cushion to your family in case of need, thus it is always safe to opt for Insurance when compared to financial instruments.
Investing for Saving on Tax
A good investment plan also offers good tax saving options. Consider life insurance, a wherein premium amount is deductible from taxable income (under Sec 80C). Death benefits and maturity proceeds are also exemptible (Sec 10(10D).)
Over-investing will lead to the financial burden. This happens when people invest more than their capacity, and then end up cancelling their investment plans. The effect of this cancellation would be paying a huge amount as penalties.